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$500k a Year yet Struggling? Let's Do a Double Take

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Re: $500k a Year yet Struggling? Let's Do a Double Take

#131

Post by silversconfused »

jccalhoun wrote: post #95

I'm in a small Midwestern city so my cost of living is very low compared to some places in the USA. I make less than some of my colleagues in larger cities but even with student loans and getting ready to buy a house, I am quite comfortable. Even still, I look at some of my coworkers who are making what I'm making and were freaking out when they changed our pay schedule so we would get paid a week later. What the hel…

My first job after moving out paid weekly, my second job paid monthly, my subsequent jobs have all paid twice monthly.

I learned a LOT about managing spending in that first year or two. Changing when you are paid changes everything when you are paycheck to paycheck, UNLESS you comfortably have a month of savings in the bank. (For anyone in this situation, I learned to first pay your bills, put some money in savings, THEN buy your food and gas and stuff you can technically do without or have the option to choose cheaper alternatives. You can always remove money from savings, but never do it for something that you don't need to survive.)

Re: $500k a Year yet Struggling? Let's Do a Double Take

#132

Post by MuffinFlavored »

ralph84 wrote: post #68
cableshaft wrote: post #14

"Some of these payments are applied to the principal on their loans, which increases the couple’s net worth by either building their home equity or by reducing their student debt. So that’s also savings." I don't count paying down a debt as "savings". It might be an increase in net worth but not savings. If paying down debt is considered "savings" now, then the entire USA is "saving money". But I think that not only…

It absolutely is savings. Compare two people: Person #1 - Makes $6000/month - Has an interest-only mortgage payment of $1000/month (yes it's still possible to get interest-only mortgages) - All other expenses are $4000/month - Puts $1000/month in a savings account Person #2 - Makes $6000/month - Has a mortgage payment of $1000 interest + $1000 principal = $2000/month - All other expenses are $4000/month Person #1 and…

> interest-only mortgage

Why would anybody ever do this?

Re: $500k a Year yet Struggling? Let's Do a Double Take

#133

Post by arcticbull »

notahacker wrote: post #109
astura wrote: post #15

103,500/year on unexplained "other expenses??" Over $8,500/month?!! Which is almost double their mortgage payments Um.... What the hell? Their biggest line item is completely unexplained yet they are trying to explain where their money goes? I live a fairly indulgent life and I spend less than that on everything in a year. I can't imagine spending six figures on "misc" unless there's a lot of hookers and blow involve…

The linked CNN article[1] breaks it down as essentially $52k on childcare and expensive child activities, 23k on food including some undoubtedly expensive "date nights" and the rest on the sort of insurance and maintenance costs you incur when everything you have is very expensive. The Bloomberg author's probably aiming to make it seem even more frivolous by having "other" as a massive line item, not that I'm convinc…

Yes, this is a portrait of lifestyle inflation. Their income almost perfectly matches their outflows, that’s not struggle here, that’s lifestyle inflation. If they made $1MM I’d imagine their outflows would be right around $950.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#134

Post by imtringued »

michaelmrose wrote: post #82
Areading314 wrote: post #28

Earlier quoted context omitted.

This doesn't make any sense -- paying down debt instead of SPENDING the money increases net worth and is ultimately the same as socking money into a savings account if you're debt-free.

If your car dies and you can't get to work you can use your savings to fix your car so you can keep earning money. Paying down your debt MAY increase the likelihood that you can borrow again. In the long term not paying interest on it will increase your income over time certainly but in the short term decreased debt and increased savings aren't interchangeable.

If they are truly strapped for cash because their house burned down but they don't have insurance they can still try to do without expensive vacations and other non obligatory expenses. If you can afford to keep paying $60k a year for 30 years for something that does no longer exist then there is no short term risk that is meaningfully destructive to your life.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#135

Post by imtringued »

dagw wrote: post #128
ralph84 wrote: post #68

Earlier quoted context omitted.

It absolutely is savings. Compare two people: Person #1 - Makes $6000/month - Has an interest-only mortgage payment of $1000/month (yes it's still possible to get interest-only mortgages) - All other expenses are $4000/month - Puts $1000/month in a savings account Person #2 - Makes $6000/month - Has a mortgage payment of $1000 interest + $1000 principal = $2000/month - All other expenses are $4000/month Person #1 and…

The caviates here are a finite time horizon, whether or not you ever plan on selling your house and whether or not you care about what sort of inheritance you want to leave. If person #1 and #2 both live in their houses until they die and don't have anybody they want to leave their money to then it depends on how many years there are between #2 pays off his loan and when he dies (since from your perspective all your…

They still benefit from fixed prices while rent can keep going up.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#136

Post by silversconfused »

bluGill wrote: post #122
throwaway0516 wrote: post #115

We make a little over $500K and I would not say we are struggling day to day, but we won't have so much saved as people expect. We lead a modest life (live in an apt, drive a compact) and live in SV. Monthly House rent is $3000, Kids schools is $2400, kids activities is $2000, groceries and eating out is $1500, travel expenses averaged is $1000, misc expenses (gas,utils,shopping,car maint) is $2000. We do not have an…

Kids school could be zero if you would go to public school. You can eat out less and eat cheaper food at home cutting the grocery bill by a lot. You don't have to travel. Your misc expenses seem high as well, you could buy an older reliable car (some cars are much cheaper to maintain than others). You could probably get a cheaper house. You don't WANT to do those things - I don't blame you - but that doesn't mean you…

3000/m on 500/y is extremely inexpensive. They will not find cheaper for 4 people without driving up transportation costs and killing leisure time. They probably have an affordable car, as compacts tend not to be "luxury" cars with many bells and whistles to maintain. Tuition, well, you pay for what's important to you, and obviously they would rather dump this into the kids than saving. Hardly worth criticizing as excess. Groceries and eating out are not going to get cheaper. They are already less than $10 per day per person. Again, one couldn't call that excessive.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#137

Post by throwaway0516 »

bluGill wrote: post #122
throwaway0516 wrote: post #115

We make a little over $500K and I would not say we are struggling day to day, but we won't have so much saved as people expect. We lead a modest life (live in an apt, drive a compact) and live in SV. Monthly House rent is $3000, Kids schools is $2400, kids activities is $2000, groceries and eating out is $1500, travel expenses averaged is $1000, misc expenses (gas,utils,shopping,car maint) is $2000. We do not have an…

Kids school could be zero if you would go to public school. You can eat out less and eat cheaper food at home cutting the grocery bill by a lot. You don't have to travel. Your misc expenses seem high as well, you could buy an older reliable car (some cars are much cheaper to maintain than others). You could probably get a cheaper house. You don't WANT to do those things - I don't blame you - but that doesn't mean you…

Public schools are no good in SV, so either I have to spend $4500 as rent in a good school district or spend low in rent and send kids to private school. And $3000 is the cheapest you can get in a decent location in SV

Re: $500k a Year yet Struggling? Let's Do a Double Take

#138

Post by bluGill »

dan-robertson wrote: post #111
bluGill wrote: post #99

Earlier quoted context omitted.

Not always. Some are well funded. Others the rich kids from the nice neighborhood go to private schools, so the rich parents don't care about public school funding. Often poor parents don't care about school other than a cheap daycare and so they don't fund the public schools well either. Note that school funding and outcome is not well correlated.

> Often poor parents don't care about school other than a cheap daycare and so they don't fund the public schools well either. I think that’s a bit of an unfair characterisation. Most parents do want their children to have good educations. Without having any source or data to back up this claim, I would expect that the difficulties faced by poorly funded schools full of poor pupils are not due to parents not caring a…

If you look at school districts that have more than one school: the schools in poor neighborhoods have worse results than the ones in middle class neighborhood. This is within the same school district so school funding is the same.

It is fair to say I don't know the parents don't care. However whatever the difference is, it is at home not the school.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#139

Post by imtringued »

dagw wrote: post #77
nopriorarrests wrote: post #59

Earlier quoted context omitted.

Even in this case, your house value can take a sudden plunge. Savings are savings, they are not going anywhere. It's money that sits in your bank account and you always know how many years without work you can afford.

So when I put money every month into an index fund, that doesn't count as savings?

Yes it boils down to this. People don't count things that increase your networth as savings (or in other words: nothing counts as savings). Therefore everyone's savings is somewhere around $0.

Re: $500k a Year yet Struggling? Let's Do a Double Take

#140

Post by dagw »

MuffinFlavored wrote: post #132
ralph84 wrote: post #68

Earlier quoted context omitted.

It absolutely is savings. Compare two people: Person #1 - Makes $6000/month - Has an interest-only mortgage payment of $1000/month (yes it's still possible to get interest-only mortgages) - All other expenses are $4000/month - Puts $1000/month in a savings account Person #2 - Makes $6000/month - Has a mortgage payment of $1000 interest + $1000 principal = $2000/month - All other expenses are $4000/month Person #1 and…

> interest-only mortgage Why would anybody ever do this?

If your interest is 2% and you believe you can get 4% from some other investment, then some people might ask themselves why 'invest' in paying off your mortgage?
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